Oversight of government spending

Over the past few years, the preparation and delivery of the federal budget has become an early spring tradition that is eagerly awaited by the media and major stakeholder groups in the country. It is one of the most anticipated events on the political calendar, the culmination of almost 12 months of analysis by Department of Finance officials and other key federal departments that have been facilitated by a steady stream of lobbying and consultations.

The primary purpose of the budget is to give citizens an overview of the state of the economy and to request from Parliament approval to impose new taxes or to modify existing ones in order to finance the government’s spending plans. While the budget speech is seen as the highlight of the budget process, the real content of the budget is contained in the detailed estimates of government expenditures and revenues for the upcoming year and a description of the “ways and means” the government plans to give effect to its plans.

Historically, the media are mostly interested in the details surrounding revenue generation such as tax changes and are far less preoccupied with the government’s spending plans for the next fiscal year, even though in 2012 the federal government spent more than $270 billion. While the media has no obligation to examine spending, each fiscal year members of Parliament are obliged to examine the spending plans of the federal government and approve all expenditures before it can disburse funds.

However, despite many efforts to reform the process to examine spending, most observers would acknowledge that scrutinizing annual spending is far less systematic or exhaustive than the analysis of the budget. In the view of Kevin Page, the Parliamentary Budget Officer, Parliament is only “at best giving perfunctory attention to spending” since no more than 90 hours, this past year, was devoted to the review of government spending. Recently, retired Senator Lowell Murray concluded his distinguished career as a parliamentarian by describing the process of approving government spending as an “empty ritual.”

Indeed, Professor Paul Thomas has pointed out, “there has never been a golden era when Parliament was effective in examining the spending proposals of government in any systematic, comprehensive, and in-depth manner.” In fact, all legislatures around the world grapple with this challenge.

There are a number of problems with the current system that are undermining Parliament’s ability to be useful. First, the estimates that are submitted by the government of the day for scrutiny are misleading since the structure of the documents does not mirror actual program spending. Second, a lot of the relevant information is incomplete and there is no linkage established between spending and results. In effect, this means that the mountains of information that are dumped in the laps of busy MPs and poorly trained staff are rarely used for their intended purpose.

Parliament has looked into this problem three times over the last 30 years. Most recently, in June 2012, MP Pat Martin as Chair of the Standing Committee on Government Operations and Estimates submitted a report entitled Strengthening Parliamentary Scrutiny of Estimates and Supply. He noted that despite many improvements introduced in 1997, no discernable progress has been evident in spending oversight. Some recommendations from the Martin report are to introduce a systematic review of individual departmental spending (every five years, for example) and to use evaluation reports and other evidence of outcomes to justify spending.

All of these recommendations are useful, but as Paul Thomas has pointed out, competitive, disciplined political parties dominate Parliament where collaboration or informed discussion is actively discouraged. As a result we need the leaders of our political parties to agree to minimize the amount of partisanship in the committees and to free the members to act in the public interest when they scrutinize the government’s spending plans. This is a lofty objective but it seems that failing to examine where tax revenues are being expended is a significant missed opportunity.

The Government Operations and Estimates Committee is the appropriate place to start a new practice of working collaboratively in examining the federal government’s spending plans. Given that the media has little interest or expertise in playing an oversight role, it falls to parliamentarians to do one of the major tasks for which they were elected.

David Zussman holds the Jarislowsky Chair in Public Sector Management and is the director of the Graduate School of Public and International Affairs at the University of Ottawa (dzussman@uottawa.ca).